Effect of institutions on multinational corporation internationalisation strategies across base-of-the-pyramid markets in Africa

Abstract:

In and amongst the institutional chaos of Africa lies a wealth of business potential for multinational corporations (MNCs) worthy of entry. This research study investigated the effect of political, regulatory and societal norm aspects of institutions on internationalising MNC, base-of-the-pyramid (BoP), strategies across various emerging economies in Africa. Although there is an abundance of literature on the BoP markets in emerging economies, literature is limited on the construct of strategy internationalisation across African countries through the institutional lens.
A qualitative research methodology was used for this study to understand the institutional variables. Individual depth, semi-structured interviews were conducted with eight managers having cumulative experience across ten MNCs. The focus of the study was on the fast-moving consumer goods (FMCG) industry. However, to give the data variance five of the interviewees were employed in the FMCG industry while the others were employed in the consumer electronics, pulp and paper, and mobile telecommunications industries. The research data were analysed using an inductive approach to explore the themes discovered. These themes were: political ties and history, consumer insight, and information and communication technology (ICT).
This study confirmed the importance of institutional aspects on BoP strategy internationalisation in Africa. Also, the study discovered a new and remarkable finding that acknowledges the BoP as non-traditional MNC shareholders rather than viewing the market as consumers or business partners alone. This progressive understanding of the BoP will encourage close, long-term interaction and mutualistic relationships, and foster shared commitment through embeddedness, as well as increase market penetration through creative channels and inclusive networks. From the findings above, a functional framework was developed for MNCs exploring the BoP space in Africa. The framework builds upon and advances the BoP 2.0 protocol developed by Stuart Hart, and will enable MNCs to anticipate challenges and risks associated with BoP markets in Africa.